Zycom, Inc.
000 Xxxxxx Xxxxx
Xxxxx 0000
Xx. Lauderdale, FL 33301
March 21, 2000
Xxxxxxxx.xxx, Inc.
00000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Re: Business Combination between Zycom, Inc. ("Zycom") and Tutornet. com,
Inc. ("Tutornet")
Ladies and Gentlemen:
We submit for your consideration a proposal relating to the transfer of all of
the shares of capital stock of Tutornet to Zycom in exchange for shares of
Zycom. This proposal is made upon the terms and subject to the conditions set
forth below.
1. Authorized and Outstanding Securities of Zycom. Zycom has 256,215 shares of
common stock, par value $.0001 per share, outstanding, and is authorized to
issue a total of 100,000,000 shares of common stock. Zycom is also authorized to
issue a total of 10,000,000 shares of preferred stock, of $1.00 par value per
share, of, which no preferred stock has been issued and none will be issued
prior to the closing contemplated herein. Zycom has no other securities, or
rights, options, or warrants to purchase securities, outstanding. At the time of
closing, Zycom will have 1,281,075 shares of common stock, par value $.0001 per
share, outstanding.
2. Authorized and Outstanding Securities of Tutornet. Tutornet currently has
outstanding approximately 25,000,000 shares of common, stock, par value $.001.
The actual number of shares of common stock outstanding of Tutornet is
_______________ in the names and amounts of such stockholders set forth in
Exhibit A attached hereto. Such outstanding common shares (not including the
Exchange Stock discussed in 2.11 below), as well as any other shares issued
prior to the closing hereunder are referred to as the "Tutornet Shares."
2.1 Approximately 24,200,000 shares of the common stock of Tutornet Shares are
held by management, affiliates and other principal stockholders of Tutornet
representing 96.80% of the
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Tutornet Shares (the "Exchange Stock"). The names and amounts of the holders of
the Exchange Stock are referred to as Exhibit B attached hereto.
2.2 Tutornet also has outstanding or will have outstanding as of the closing,
options, warrants or other rights to purchase approximately 6,000,000 share of
the common stock Tutornet. The series and amount of outstanding warrants,
options, or rights to purchase shares of the common stock, all of which afford
the holders thereof the right, under certain conditions, to acquire shares of
common stock together with the names and amounts of such holders are referred to
as (the "additional shares") set forth in Exhibit C attached hereto. The shares
to be issued or reserved for issuance by Zycom at closing shall be in exchange
for all of the Tutornet Shares, the Exchange Stock and the additional shares.
3. Issuance and Delivery of Zycom Stock in Exchange for Tutornet Stock.
(a) Exchange of Common Stock. At the time of closing:
(i) Zycom would issue or reserve for issuance at an
appropriate date, to those persons and entities referred to in
Paragraph 2 and Exhibits A, B, and C hereof (hereinafter
referred to as the "Stockholders" or "Tutornet Stockholders")
a total of 30,000,000 common shares of Zycom. It is the
intention of the parties hereto that after the exchange of
stock to the Tutornet Stockholders, the present Zycom
shareholders will own 4.1% of the outstanding stock of Zycom.
(ii) Zycom. would issue 24,200,000 share of its common stock
in exchange for the 24,200,000 shares of Exchange Stock
(hereinafter the "Exchange").
(b) Restricted Nature of Shares to be Issued. None of the Zycom shares
that would be issued in the Exchange or otherwise would be registered,
but rather would constitute "restricted securities" within the meaning
of Rule 144, promulgated under the Securities Act of 1933, as amended
(the "Act").
Immediately following the closing, Tutornet would se its best effort to
register under the Act with the United States Securities and Exchange
Commission: (i) the Exchange Stock; (ii) the Tutornet Shares; (iii) the
additional shares; and (iv) the stock held by the former officer,
director and affiliate stockholders of Zycom.
(c) Possible Adjustment in Number of Shares to be Issued. If, prior to
consummation of the Exchange, Zycom or Tutornet should:
(i) declare any dividend payable in share of its common
stock,
(ii) split or combine its shares of common stock, or
(iii) issue any additional shares of common stock
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(iv) (except as provided for the 5:1 forward split the
results for which are set forth in Paragraph 1
hereunder), an appropriate adjustment would be made
in the number of shares of common stock issuable to
the Tutornet Stockholders, or reserved for exercise
by option holders and warrant holders.
(d) Deliveries at the time of closing.
(i) Tutornet and the holders of the Exchange Stock would
deliver to Zycom at the time of closing, certificates
representing 24,200 shares of the Tutornet Stock.
(ii) Zycom would deliver at time of closing certificates,
representing in the names of the holders of the Exchange Stock
as set forth in the Agreement and Plan of Reorganization, each
in the appropriate denomination as set forth therein.
(iii) It is expected that the Agreement and Plan of
Reorganization would cause, as of the time of closing, all of
Tutornet's operations to be conducted immediately thereafter
as the operations of Zycom, or in the event of a change of
name, the new name of Zycom.
4. Closing. The closing of transactions between Business Development
Corporation, Zycom, and Tutornet would take place no later than April
12, 2000.
5. Conditions to Closing. Conditions to the Closing to be contained in the
Agreement and Plan of Reorganization between Zycom and Tutornet are the
following:
(a) Prior to the time of closing, Tutornet and Zycom will deliver
certified consolidated financial statements stated as of December 31,
1999 and December 31, 1998 that in all material respects, present
fairly, the financial position of Tutornet and Zycom, and the results
of its operations, and its cash flows in conformity with generally
accepted accounting principles.
(b) Zycom, Xxxxxxxx and the Stockholders, acting through their own
management personnel, counsel, accountants or other representatives,
designated by them, would have full opportunity to examine the books
and records of the other to determine the acceptability of their
respective businesses and to investigate all aspects of the business of
the other party, and all of its assets and liabilities, and each party
would be satisfied to proceed with the Closing upon completion of such
examination and investigation.
(c) Xxxxxxxx, no later than 10 days before the time of closing, would
have provided fully completed and executed (i) "Directors and Officers
Questionnaire's" with respect to every proposed director, officer,
significant employee and affiliate of Tutornet and (ii) furnished a
fully completed "Private Company Checklist" information to Zycom's
counsel.
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(d) 95% of the Exchange Stock of Tutornet would be tendered at Closing
for exchange into Zycom shares of common stock.
(e) Prior to the closing, Tutornet and Zycom will have provided for the
tax-free acquisition of 100% of the common stock of a suitable SEC
reporting corporation whereby, after the acquisition, the combined
entity would have complied with OTCBB Eligibility Rule (NASD Rules 6530
and 6540 of the National Association of Securities Dealers). The cost
of the acquisition of the SEC reporting corporation, excluding legal
fees, shall be paid by Business Development Corporation. Should Zycom
issue securities in connection with such an acquisition, a like amount
of securities issued for such acquisition would be surrendered to Zycom
from the holdings of Business Development Corporation.
(f) Each party shall have received favorable opinions on such legal
matters in connection with the Exchange as are reasonable.
(g) Zycom and Xxxxxxxx would have satisfied themselves that the
business of the other has been conducted in the ordinary course and in
compliance with federal and state securities laws.
(h) Neither Zycom and Xxxxxxxx will authorize the dissemination of the
release of any information to the general public or disseminate any
press release regarding the proposed transaction without the written
consent of the other party. At the time of closing the parties will
disseminate a press release satisfactory to Tutornet, Zycom and their
respective legal counsels.
(i) Pursuant to the effectuation of the undertakings contemplated by
this memorandum, Zycom and Tutornet shall be responsible for the
payment of their own expenses.
(k) Zycom, at Closing, shall have virtually no liabilities nor assets
set forth on its unaudited balance sheet as of April 8, 2000.
(k) Business Development Corporation, at the time of closing, would
have received a fee in connection with the facilitation of the proposed
transactions discussed in this Memorandum in the amount of $250,000.
6. Standstill Agreement. From the date hereof neither Business Development
Corporation, Tutornet or their principal stockholders may discuss or negotiate
with any other corporation, firm or person, or entertain or consider any
inquiries or proposals relating to the possible disposition or exchange of their
shares of capital stock of Zycom or Tutornet. Notwithstanding the foregoing, the
parties would be free to engage in activities mentioned in the preceding
sentence which are designed to complete the transactions contemplated by this
Memorandum. At any time either party provides written notice to the other of the
intention not to pursue the transactions discussed in this
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Memorandum, notice of such intention shall terminate both parties obligations
with respect to this Paragraph 6.
7. Board of Directors. At the Closing, all of Xxxxx's current board of
directors, and every person serving as an officer of Xxxxx would resign his
respective positions and/or offices by tendering written resignations. Zycom's
board members, before tendering their resignations, would appoint as members of
Zycom's new board such persons designated by Xxxxxxxx to fill such director
positions, with such appointments to be effective as of the time of closing.
8. Confidentiality. Zycom and Tutornet would furnish such information as
requested by the other as to its business and operations. In compliance with
this paragraph, the parties specifically authorize the contact with customers,
employees, and partners of the other. It is agreed that such disclosures and
information obtained are proprietary and confidential to the extent such
information does not exist in the public domain. The parties agree to hold such
information in confidence and not to reveal any of such information to any
person who is not a party to this transaction, or an officer, director or key
employee thereof, and not to use the information obtained for any purpose other
than assisting in its due diligence inquiry precedent to the time of closing.
Upon request by Zycom or Tutornet a confidentiality agreement would be executed
by any person selected to receive confidential information, prior to receipt of
such information.
Policy of Zycom Regarding Representations and Warranties Contained in an
Eventual Agreement and Plan of Reorganization.
The warranties of Zycom that become a part of an eventual Agreement and Plan of
Reorganization would be made exclusively by Zycom.
If the foregoing proposed points are agreeable to please so indicate on the copy
of this document enclosed herewith in the space provide and return the same to
the undersigned on or before 5 pm, eastern time, Thursday, March 23, 2000.
Very truly yours, Accepted:
/s/ Xxx X. Xxxxxxx
Zycom, Inc. /s/ Xxxxxx Xxxxx Date:______________
Xxx X. Xxxxxxx, President Xxxxxx Xxxxx, President, Xxxxxxxx.xxx Inc.
March 21, 2000
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